In microeconomics, you learn the theory of supply and demand, which is, basically, a model to determine the price of a product. The most basic explanation of supply and demand is if the demand for the product is high and the supply is low then the price of the product will be high. Take diamonds, for example. Whenever there is a finite amount of something the value goes up. I remember my dad telling me to invest in land abutting water. The reason? There is a finite amount of land abutting water. Once all the land is sold that touches water, it is gone unless someone decides to resell.

Similarly, there is a finite number of doctors or health care providers who accept Medicaid. Recently data show that Medicaid enrollment has jumped 3 million since October 2013. There are approximately 61 million Americans on Medicaid and approximately 319,510,848 Americans total. This increase in Medicaid enrollment is mainly due to 26 states expanding Medicaid due to the ACA, although Medicaid enrollment has increased in the states that opted to not expand as well.

That’s GREAT…..right?? 3 million more people are covered by health insurance than were covered back in October 2013. However, although theoretically the statistic should correlate to more people getting medical coverage, it may not.

We cannot assume that offering people Medicaid coverage will necessarily provide them with adequate access to health care services.

While the number of people on Medicaid is climbing, there is no evidence that the number of providers who accept Medicaid is climbing.

Health-care consulting firm, Merritt Hawkins, conducted a 2014 survey of Medicaid acceptance rates in the U.S.’s largest 15 cities. The 2014 survey researched five medical specialties: cardiology, dermatology, obstetrics-gynecology, orthopedic surgery, and family practice. It also calculated the average wait-time for Medicaid recipients to see a doctor in one of the five specialties.

The survey found that only 45.7% of physicians are now accepting Medicaid patients. This is a decrease from 55.4% in 2009 and 49.9% in 2004. Compare the percentage of physicians accepting Medicare, which is 76%.

The percentage of physicians accepting Medicaid varies immensely state by state. In Dallas, TX only 23% of physicians accept Medicaid; whereas in Boston 73% of the physicians accept Medicaid (but even though Boston seems to have more physicians accepting Medicaid, the wait time is not good; the average wait time to see a dermatologist in Boston is 72 days).

Much of the problem is high population and low percentage of doctors. See the table below.

Even more of the problem is that physicians refuse to accept Medicaid. So, looking at the above chart, and based on an estimated current U. S. population of about 319,510,848, there are two physicians for every 845 persons. Yet, only 23% of physicians accept Medicaid in Dallas. Less than half the physicians nationally accept Medicaid. So, of the 845 physicians, roughly 422 of the physicians will refuse to accept Medicaid. More and more Medicaid insured people will have fewer physicians. This is a scary thought.

Remember the horrible tragedy of Deamonte Driver? Even though Deamonte Driver died due to not seeing a dentist, not a physician, the analogy still applies. A 12-year-old Maryland boy, Deamonte Driver, died when a tooth infection spread to his brain. His mother, Alyce Driver, had been unable to find a dentist to treat him on Medicaid. Deamonte Driver died not because he was uninsured; he died because he was insured by the government.

Now imagine that it is not a dentist a parent is trying to find, but a cardiologist, where, in D.C., if you are on Medicaid, the average wait-time to see a cardiologist is 32 days. If only your heart problems would pause for 32 days.

The average cumulative wait times to see a cardiologist in all 15 markets was 16.8 days. Whereas if I were to call up a cardiologist, I would be able to make an appointment within a day or so.

I found a blog online that charted why doctors will not take Medicaid. See below.

Medicaid is “single payer”. Arguably, it is the prototype for “single payer” universal healthcare, though the advocates of “single payer” hardly tout it as such. However, the “single payer” doesn’t pay very much, so there aren’t enough physicians willing to “take what they get” and jump through the imposed administrative “hoops” as well.

Economics tells us that, as the “single payer” pays less and less, the number of physicians willing to “take what they get” will continue to decline, as long as there are better compensated alternatives. Your experience tells us that, as the “hoops” become smaller and more numerous, even fewer physicians will be willing to continue, as long as there is an alternative. Questionable efforts at retrospective compensation recovery and questionable exclusions from the provider pool will drive the numbers down further.

Projected further reductions in compensation for Medicare providers will predictably have the same effects on the Medicare provider pool. Of course, this will be bemoaned as an “unintended consequence”, even though it was entirely predictable.

Eventually, the “ultimate solution” will become “obvious” – single payer for all, which eliminates all of the physicians’ options, with the exception of private pay, for as long as that continues to be legal. Physicians with large student loans would then find themselves in “indentured servitude”; and, fewer and fewer of the “best and brightest” will choose “indentured servitude” as their future.

None of the above is rocket surgery or brain science, though it appears to be beyond the comprehension our legislators and bureaucrats.

I am generally opposed to governmental intervention in private market affairs, but…if we the government is going to be involved in this issue, it should do so effectively and efficiently. Rates of reimbursement need to change and be increased because doing so will reduce costs…both to the government funds and to nation as a whole (due to increases in productivity).

You’ve also convinced me that the costs of defense that are incurred as a result of faulty audits by Medicare and Medicaid audit contractors should be borne by the government (or ideally, by the contractor). A faulty audit is not one that only results in nothing due from the provider, but where the amounts claimed to be due are not even close to the amount actually do. For example, if the auditor says a provider was overpaid $800,000 (extrapolation my foot!) and after reviewing the audit, Medicare or Medicaid says the provider was overpaid $500, that’s a faulty audit. The provider would not have gone to the expense of an attorney had the auditor performed their duties correctly, and as such, the government (or auditor) should bear the costs of the defense.

It’s bad enough that providers can barely turn a profit for the Medicaid services they offer, but to subject them to faulty audits that try and extract ridiculous sums of money from them that are far in excess of what is actually due is beyond the pale.

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Knicole C. Emanuel

Knicole C. Emanuel is an attorney at Potomac Law Group in Raleigh, NC where she concentrates on Medicare and Medicaid regulatory compliance litigation. See legal disclaimer @ "About Knicole."
Follow her on Twitter at @medicaidlawnc.